Brad Keithley, an oil and gas attorney in Anchorage, gave a presentation last month to the Alaska Support Industry Alliance in which he quoted some columns of mine about a recent court decision on the pipeline value, characterized them as "spin" and concluded, with a nod to James Carville, "it's the production rate, stupid."

Keithley is a partner in Perkins Coie and the co-head of the oil and gas practice. From 1990 to 2008 he was  a partner in the Jones Day law firm in Dallas and Houston.

He contends that the only thing that matters in Alaska is the oil production rate and that the court decision saying the pipeline has more than a half-century of life left in it and that it could operate at much lower flow rates than advertised is irrelevant to the current debate over oil taxes.

Everyone agrees that production is at the top of the priority list. But production is dependent on several factors that are relevant to Alaska.

A better way to look at this, in the spirit of the Ragin' Cajun, is for Keithley to acknowledge that "It's the production, the reserves, the profits, the taxes, the access to North Slope facilities, the competition, the permitting, the research and the operating life of the pipeline, stupid."

Keithley testified before the Senate Resources Committee this afternoon, a followup to the testimony of  attorneys Robin Brena and Craig Richards, who worked on the pipeline valuation case. Keithley did not work on that case or have access to the large number of confidential documents entered as evidence. Sen. Tom Waggoner, a Kenai Republican and co-chair of the committee with Sen. Joe Paskvan, wanted him to testify.

Keithley gave a PowerPoint presentation similar to the one he gave the Alliance, though he removed the word "stupid," from his line about the importance of the production rate.

He should have left it in.

After the release of the ruling, a document that says the pipeline should be running at least until 2065 with today's proven and economic reserves, I wrote here that "the good news for Alaskans is that numerous oil company documents and expert testimony shows there is no reason to believe the pipeline will be shut down this decade or for a long time after. To the contrary, the oil companies are booking reserves far into the future and making plans to run the pipeline at lower rates, which means more decades of operation for the pipeline."

I also quoted Paskvan in a column about the ruling.

"This should ease the minds of many Alaskans as to the imminent demise of the pipeline. This indicates that we have a 50-year minimum operation without considering many of the resources that are likely to be harvested from the North Slope," Paskvan said, another statement that Keithley claims is "spin."

I had an e-mail exchange with Keithley after his Alliance presentation and challenged the "spin" claim. He recounted this in his blog about oil and gas matters. He's an articulate and knowledgeable person.

I disagree with him that the Gleason decision has no relevance to the current debate over the ACES tax system in Alaska.

One of the most relevant particulars is that internal documents from BP and the reports it has filed with the Securities and Exchange Commission, even those after the passage of ACES, show that it expects the pipeline to be operating for many decades.

And yet the fear factor that a pipeline shutdown is imminent continues to circulate in Alaska.

There are still people going around saying that the pipeline may be shut down in a decade or less, using that argument to amplify the claims in the oil tax debate and add to the sense of alarm.

For instance, this week Keithley appeared on Dan Fagan's talk show in Anchorage.

Fagan brought up the fear factor when he asked Keithley:

"But just the whole idea of keeping the pipeline flowing, because it is cost prohibitive or it gets more expensive, the less oil. Talk about that scenario and when we could run against a wall there, the oil companies just say, OK, we’re shutting it down, it’s just not worth it.”

This is the point at which Keithley should have put Fagan's worries to rest, by quoting BP's internal documents, at least those that are now public.

Instead, Keithley said that the companies will have to make "significant investments" to operate below 300,000 barrels a day by adding heat to the pipeline and they may not do it.

(One of the serious contradictions that continues to concern me is that despite the internal statements by BP, the companies argued in court as a group that 300,000 barrels was the lower limit of pipeline operation.)

Regarding those "significant investments" and Gleason's ruling, Keithley said:

“What she assumed was that they would make those investments and keep the oil flowing. It would be appropriate or it would be cost beneficial to make those investments. But that's based upon projections of oil prices, it's based upon projections of operating costs, it's based on a whole variety of projections that may or may not come to pass. At each of these gates the companies have to make the investment decision to make the investments in TAPS to keep it flowing below those levels. And that’s not guaranteed."

Nothing is guaranteed, that's correct.

But BP is projecting that Prudhoe Bay has another half-century of profitable production yet to come. That's not a guarantee. It's a judgement that should wipe out the fear factor of a shutdown. Does that mean that we have nothing to worry about? No.

Declining production is a problem that must be addressed. What it takes to increase production is the key.

Fagan asked if the "gates" are at 500,000 and 300,000 barrels a day, again raising the scary prospect of pulling the plug on TAPS. Keithley agreed that those are gates at which decisions will be made and there are additional ones below 300,000.

Now i's not just an Alaska judge and attorneys for Fairbanks and Valdez who are saying those gates are already open for economic reasons.

It's one of the major oil companies in Alaska. But Fagan continued to voice worries about a pipeline shutdown at 500,000 barrels a day.

“Would there be any repercussions regarding their leases, if at say, 500,000 barrels per day in the pipeline, they just said, OK, that’s it, we don’t see this as a wise investment. Would they suffer any kind of consequences other than they just would not get the oil to market?”

Keithley should have said that the oil executives would find themselves on the unemployment line if they abandoned anything as profitable as the trans-Alaska oil pipeline and seven billion barrels of proven reserves.

Instead he said that the companies would run afoul of state lease requirements and face the big costs of removing facilities, etc., which is true enough. He should have responded that the economics favor keeping the pipeline running for as long as possible, which is the main point of the Gleason decision.

Production is important. An informed discussion is also important.